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U.S. Senate to Limit ATM Charges?

The great thing about Cato policy papers is that even sometimes obscure topics are timeless, because government never rests when it comes to running our lives and restricting our choices.

Take the issue of bank ATM surcharges, those fees you can sometimes be charged for using another bank’s ATM. Back in 1998, then Senator Al D’Amato proposed capping those fees. Thankfully that effort failed. I would like to believe one of the reasons for its failure is a 1998 Cato Briefing Paper by John Charles Bradbury, describing how ATM surcharge fees actually increase consumer choice by funding ever increasing ATM locations.

Well the Senate is at it again. Senator Harkin has proposed an amendment to Dodd’s financial regulation bill that would cap ATM surcharge fees at 50 cents (it is not clear where Harkin came up with that number, perhaps his love of music). The same flaws in D’Amato’s scheme twelve years ago hold true today.

The other great thing about existing Cato briefing papers is that it saves me the work of writing on the topic. Just as well since I don’t believe I could improve upon Bradbury’s conclusions:

Consumers have the ability to obtain money from their bank accounts without paying a surcharge. ATM surcharges allow banks and other ATM operators to deploy machines in more convenient locations than might otherwise be possible. Customers who are unwilling to pay a surcharge incur the cost of inconvenience, while those who value the convenience more than the cost of the fee have the option of paying for it. Senator D’Amato, Rep. Bernie Sanders (I-Vt.)–Congress’s self-proclaimed socialist–and numerous consumer groups have formed an unlikely coalition to put an end to ATM surcharges. If successful, that campaign would limit the options of consumers, since there would be no means to support the more convenient ATM machines. Prohibiting ATM surcharges would only harm consumers by slowing the expansion of ATMs and reducing the number of ATMs currently deployed without making anyone better off.